Elders selling the farm, Ridley eyed

THE big name in the bush, Elders, is progressing its sales processes and is believed to be close to selling more of its timber projects while due diligence is being conducted for its automotive business.

THE big name in the bush, Elders, is progressing its sales processes and is believed to be close to selling more of its timber projects while due diligence is being conducted for its automotive business.

It has sent information memorandums to bidders for its rural services division, with formal offers due on February 28, reports The Australian Financial Review.

Macquarie is understood to have tried to get Canada's Agrium, which owns Landmark, in to the running. But it is believed Landmark is not part of the formal sales process. As Elders' larger rival, it may have hit competition issues. Interestingly, Western Australia's Wellard Group wanted to take a look but was turned down, viewed as a competitor.

Luckily for Gresham-advised rural services group Ruralco, Elders is keen to see the merits of its case. Ruralco, which has a 12 per cent stake in Elders, wanted to progress a merger deal last year, which was knocked back by the Elders board.

Ruralco appears to be in the box seat, but North American heavyweights are likely to take a keen look, with Cargill, New York-based Bunge or Canada's Richardson fingered in ag ciricles. Japan's Marubeni Corp is also viewed as a likely contender. It owns the Helena Chemical Co in the US, a distributor of crop-protection products. Private equity players are also expected to take a look.

Meanwhile, there is a view that Ridley could finally be ripe for takeover. At the end of the month Ridley is expected to formally free itself of its Cheetham Salt business, following an agreement, brokered by Barclays Capital, in November last year to sell the division to CK Life Sciences for $150 million. The deal is due to settle by February 28.

This makes the task for Guinness Peat Group to extricate itself from the stock all the easier. Its 23 per cent share offers strategic advantage for a player wanting to get its hands on Ridley's assets. Ridley is a large buyer of grain, making it a potential home for grain accumulators and marketers.

GrainCorp had a try in 2008 but is believed to be keen on securing the business, which offers good counter cyclical earnings. When dry weather hurts crop production it also boosts animal feed prices as farmers turn to man-made feed. French commodity house Louis Dreyfus has been stepping up its activities in Australia and is believed to be keen on Ridley.

Gold Coin, part of Hong Kong-based Zuelling Group, is believed to be keen on taking a 20 per cent stake. This could force would-be acquirers to make a move on GPG's parcel or risk the Asian player gaining a blocking stake.

Expanding Alan Winney-Sumitomo venture Emerald could be a dark horse in the Ridley race, as could private equity firms or WA's CBH. AMP lifted its stake in Ridley in December. AMP, along with Ellerston Capital, made a pretty penny selling their holdings in GrainCorp to Archer Daniels Midland ahead of the US group's move to buy GrainCorp.